Clash of Opinions: Five Questions and Five Answers!
Written by: Luke, Sam, Li Zhongzhen, Pang Meimei
Web3 Compliance Research Group Launches Its First Roundtable Column!
[Web3 Compliance · Roundtable Discussion] is a monthly dialogue program focusing on industry hot topics. Each issue invites 4 to 6 members from diverse backgrounds in law, technology, projects, finance, and more to respond to and debate core questions, systematically organizing diverse viewpoints to present compliance insights with depth, perspective, and practical value.
Recently, the U.S. House of Representatives passed three legislative proposals regarding cryptocurrency regulation with an overwhelming majority: the "Genius Act," the "Clarity Act," and the "Anti-CBDC Surveillance Nation Act." Among them, the "Genius Act," referred to as an important step to "consolidate the United States' dominant position in the global financial and cryptocurrency sectors," was officially signed into effect by Trump on the 18th and has been reported by domestic media such as CCTV and Caijing.
In this issue, we posed five questions to the outstanding members of the Web3 Compliance Research Group: "What does the Genius Act aim to achieve?" "How should we understand the regulatory division between the SEC and CFTC under the Clarity Act?" "Why is the U.S. against CBDCs?" "Will these three acts inspire other countries in cryptocurrency regulation?" "How will they affect the operation of cryptocurrency startups?"
Now, let's get to the main topic!
Q1: Can you explain in simple terms what the Genius Act aims to do? Do stablecoins from countries outside the U.S. still have competitive opportunities?
Luke:
In simple terms, the Genius Act establishes a strict legal framework for stablecoins (like USDT and USDC) and their issuers by the U.S. government. It clarifies the definition of stablecoins, legally recognizing them. This aims to protect the rights of both issuers and consumers using stablecoins.
The main components are threefold.
First, the act defines stablecoins as 'payment stablecoins,' explicitly stating that stablecoins do not possess the attributes of securities or commodities. This indicates that stablecoins themselves do not have investment appreciation properties.
Second, it strictly requires stablecoin issuers to manage consumer redemptions at a 1:1 high liquidity ratio. They must publicly disclose their ledgers monthly to ensure this 1:1 high liquidity. Additionally, if the market capitalization of a stablecoin issuer exceeds $50 billion, they must submit annual audit reports and undergo dual regulation from state and federal authorities to prevent a "de-pegging" collapse like Terra/Luna.
Third, it states that if a stablecoin issuing company goes bankrupt, users have priority for compensation, essentially providing a safety net for users. There are also anti-money laundering (AML) and know your customer (KYC) requirements, similar to banks, ensuring transaction transparency and preventing bad actors from exploiting loopholes.
Sam:
The Genius Act's role is to regulate the issuance and trading of stablecoins in compliance, and it appears to be very strict. It requires that any stablecoin intended for issuance or circulation in North America must obtain a federal or state license, such as qualifying as a legitimate bank or regulated financial institution. This means that to continue in the stablecoin business, one must be fully backed, disclose information, and comply with AML regulations.
This move is primarily aimed at Tether, which currently has a market cap of around $1,600 billion. The industry has faced risks of collapse in previous cycles, mainly due to the opacity of Tether's reserves and the audits being conducted by the same entities. Tether is often mocked within the industry, with its annual KPI being to create a crisis and then buy back at a low price.
Moreover, Tether, as the leading stablecoin, holds over 70% of the stablecoin market. It seems that such an unstable stablecoin can achieve this scale, which certainly attracts the attention of consortiums. However, for these consortiums to enter the market, they first need to design market rules to legally obtain profits, so the essence of the Genius Act is to provide entry tickets for new players or "old money."
The nature of stablecoins in countries outside North America is similar. Currently, mainstream stablecoins are still pegged to fiat currencies; strong fiat currencies correspond to strong stablecoins, while weak fiat currencies have little competitive opportunity, like the Naira in West Africa. However, as long as there are sufficient dollar reserves, anyone can issue a dollar stablecoin. Ultimately, it depends on whether people trust your foreign exchange reserves, and there’s also the issue of migration costs; the educational and migration costs for stablecoins are very high. Therefore, crypto-friendly countries and regions have a stronger competitive advantage.
Lawyer Li Zhongzhen:
The Genius Act establishes the concept of payment stablecoins and details the requirements and regulatory systems for issuing payment stablecoins in the U.S. It stipulates that issuers of payment stablecoins must maintain at least a 1:1 reserve of assets, which can only be strong liquidity dollar assets like U.S. dollars or U.S. Treasury bonds with a maturity of 93 days or less. The Genius Act aims to siphon global capital into strong liquidity dollar assets, further enhancing dollar liquidity, establishing the dominance of on-chain dollars, and consolidating dollar hegemony.
Do stablecoins from countries outside the U.S. still have competitive opportunities? This question actually depends on the comprehensive strength of these countries and regions in reality. I believe China, the European Union, and Japan still have opportunities, while other countries and regions do not.
Pang Meimei:
In the past few years, no one has been able to clearly define what stablecoins are, what the threshold requirements for issuers are, who should be responsible for their regulation, and what to do when problems arise. The Genius Act aims to end this regulatory vacuum and address these issues.
Of course, while the Genius Act reinforces the dominant position of the dollar in the global reserve and payment system by mandating stablecoin reserves in U.S. Treasury bonds and dollar assets, it also further consolidates the dollar's international monetary hegemony. However, the main role of stablecoins is to facilitate cross-border payments and settlements, enhancing the flexibility and efficiency of trade settlements without altering national monetary policies. Many countries worldwide are now laying out plans for the development of stablecoins. As the world's largest goods trading nation, China has a natural strategic demand for optimizing cross-border settlement efficiency and costs, presenting a huge opportunity, particularly in Hong Kong.
On May 21 of this year, the Hong Kong Legislative Council passed the "Stablecoin Conditions Draft," becoming the world's first jurisdiction to implement full-chain regulation of stablecoins. In the trend of promoting stablecoin development, Hong Kong plays a key role, and China has unique advantages and strong competitiveness.
Q2: How should we understand the regulatory division between the Clarity Act, the SEC, and the CFTC? What impact will the definition of "mature blockchain" have on the industry?
Luke:
In simple terms, the Clarity Act is essentially aimed at addressing the "gray area" of digital asset regulation by clearly delineating the responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), avoiding regulatory overlap or vacuum, allowing the crypto industry to develop in a more orderly manner. Simply put, the SEC primarily oversees digital assets that have investment return expectations like stocks (such as certain tokenized securities), while the CFTC is responsible for those that resemble "commodities," like Bitcoin or Ethereum, whose value primarily comes from actual use rather than dividends. This aims to refine the legal framework defining the entire cryptocurrency market and its position, along with a series of reduced regulations on DeFi to encourage the landing and innovation of DeFi projects.
It is also necessary to mention the definition of "mature blockchain" in the act. The act defines "mature blockchain" as a network confirmed through a certification process submitted to the SEC that meets statutory conditions (such as decentralized governance, distributed ownership, and no single entity control). The SEC can also establish additional rules to refine these standards. Specifically, certification includes proving the degree of decentralization of the network, market adoption rate, openness, and interoperability. If certified (usually taking effect after a period unless the SEC objects), this blockchain is considered "mature."
Sam:
Dividing boundaries and managing separately is a typical decentralization approach. The SEC manages securities-type tokens, POS algorithms, and DeFi; decentralized projects that meet the definition of mature blockchain fall under the CFTC's jurisdiction.
The definition of mature blockchain is favorable for POW algorithm projects because POW is the most original form of cryptocurrency, fully decentralized. These projects pursue technical excellence, optimizing algorithms and performance, adhering to the principle of Code Is Law. The industry has long believed that the success of the tech stack does not equate to the success of the chain, and various securities-like regulations often hinder technical personnel from entering the field. Those with real technical expertise have been hesitant to enter, fearing severe repercussions. Now, everyone can code with peace of mind without worrying about the SEC knocking on their door. Miners can also expand production without restraint, alleviating some pressure on the chip industry, and hardware prices may decline. The payback period for POW has doubled from the previous cycle to the last year, and it seems likely to decrease.
Afterward, everyone will play their own game, with the SEC taking POS to the financial market to compete for APY, while the CFTC brings POW back to the original intention of blockchain.
Lawyer Li Zhongzhen:
The Clarity Act resolves the chaotic regulatory division between the SEC and CFTC in the crypto field, clearly stating that digital commodities fall under CFTC management, while restricted digital assets are handled by the SEC, further refining the regulatory framework in the U.S. crypto space. A clear and defined regulatory environment helps the development of the crypto industry. Any emerging industry is not afraid of regulation; what it fears is the anxiety caused by unclear regulatory responsibilities.
The definition of "mature blockchain" provides the industry with a relatively objective standard, stating that the largest holder's proportion of tokens must not exceed 20%, and no individual or entity can unilaterally control the blockchain or its applications. "Mature blockchain" allows projects initially issued as securities to transition to commodities once they meet the "mature blockchain" standards, shifting from SEC regulation to CFTC regulation. This is very friendly to the crypto industry; being defined as a security under SEC regulation incurs high compliance costs that many startups cannot afford. However, if defined as a commodity under CFTC regulation, compliance costs are relatively reduced.
Pang Meimei:
In simple terms, this act labels digital assets, with the Clarity Act clearly categorizing digital assets into different classes, clearly delineating the regulatory scope of the SEC and CFTC. The CFTC primarily regulates securities-type products, which have higher and stricter requirements, while SEC regulation is much more lenient. Therefore, I believe that the division of regulatory responsibilities provides a more relaxed compliance pathway for projects genuinely committed to blockchain. The most ingenious design of this act is that it creates a pathway for digital assets to evolve from securities to commodities, providing a "graduation channel" for these projects from "securities" to "digital commodities."
The concept of a mature blockchain system is mainly used to determine whether a blockchain has reached a sufficient level of decentralization, thereby deciding whether its tokens can transition from "securities" to "digital commodities." Nowadays, blockchain technology is becoming increasingly widespread, and the industry is undergoing a paradigm shift, determining which standards or dimensions and characteristics distinguish a reliable blockchain that has reached maturity. The act provides a clear definition, specifying details and evaluation standards, which helps entrepreneurs understand how to meet these standards and offers greater certainty for ICOs and IDOs.
Q3: The U.S. Anti-CBDC Act seems to stand in stark contrast to the attempts of some countries to promote CBDCs. Why is there opposition to CBDCs? Is there anything else you would like to add?
Luke:
The main reasons for the U.S. opposition to CBDCs are as follows. First, there are concerns about the Federal Reserve gaining increased power over individuals' financial asset privacy. Second, there are worries about the stability of the financial system. Third, there are concerns about global monetary centralization.
First, privacy and surveillance risks are core points of opposition. CBDCs are essentially a digital banking system directly issued by central banks (similar to stablecoin issuers, but at the national level), capable of tracking every transaction in real-time. This could be misused for government surveillance or various human error risks, infringing on personal financial privacy and freedom. Supporters of the act argue that this would create a "surveillance state," similar to China's digital yuan, which, while convenient, also enhances the central bank's transaction monitoring capabilities. In contrast, the U.S. emphasizes the protection of constitutional rights and personal privacy, avoiding excessive government intervention in private financial property.
Second, CBDCs would strengthen "disintermediation" and impact the implementation of the Federal Reserve's monetary policy. Allowing central banks to directly serve individual consumers would directly undermine the role of commercial banks, potentially leading to deposit outflows, intensified competition among banks, and even triggering a wave of bank failures, disrupting the existing economic structure. The Federal Reserve's 2022 report pointed out that such a transformation is too radical and could amplify systemic risks. While CBDCs are primarily intended to enhance payment efficiency and financial inclusion, the U.S. believes these benefits do not outweigh the potential harms.
Additionally, there are concerns about power centralization and global competition. Opponents of CBDCs worry that they would enhance central banks' control over monetary policy and even foster digital hegemony internationally, such as a country's CBDC dominating global trade and threatening national sovereignty. The U.S. chooses to oppose CBDCs to maintain the traditional position of the dollar and promote private stablecoins (like USDC) as alternatives, encouraging market-driven innovation.
Sam:
The Federal Reserve is not affiliated with any political party, and there are no political donation operations, so it will certainly prioritize those who have paid the "protection fee." If the Federal Reserve steps in, everyone else should stay out. Moreover, stablecoins at least have some decentralized attributes, such as algorithmic stablecoins and cryptocurrency-pegged stablecoins, which still have room for development with new technologies or algorithms in the future. In contrast, CBDCs are completely centralized, which fundamentally contradicts the principles of cryptocurrency. Decentralized assets are at the core of these three acts, and the demands for personal privacy, financial freedom, and resistance to censorship are significant. Introducing CBDCs would disrupt the overall system.
In simple terms, if the Federal Reserve issues currency, it would be like "pulling down your pants to fart," making these three acts mere formalities.
Lawyer Li Zhongzhen:
The U.S. government does not have the authority to issue dollars; that power lies with the Federal Reserve. One significant reason the U.S. government is promoting the Genius Act is to bypass the Federal Reserve to expand the dollar. Allowing CBDCs would greatly benefit the Federal Reserve but provide little practical advantage to the U.S. government; only by restricting the Federal Reserve can the government achieve fiscal freedom.
In contrast, some countries attempting to promote CBDCs have the authority to issue their own currency, so there is no conflict of interest in issuing CBDCs.
Pang Meimei:
In China, everyone knows about the digital yuan, and the government has been promoting it, which is essentially an example of a CBDC. CBDCs have clear advantages, such as convenience and efficiency in payment settlements. Given these obvious benefits, why oppose them? We need to look at this issue from a more macro perspective. Generally speaking, it is difficult for individuals to connect directly with the central bank, so commercial banks serve as intermediaries. CBDCs would be a blockchain-based online banking service system operated by the central bank. If every individual could connect directly with the central bank for deposits and loans, over time, commercial banks could become redundant. I believe a significant number of commercial banks might be forced to close, which would directly harm the stability of the existing economic and financial system. Furthermore, the CBDC system is not entirely decentralized; if CBDCs are issued and become liquid, how can personal financial assets be protected? KYC and AML would still need to be implemented, which is no different from the online banking systems we currently use.
It would essentially just add blockchain technology to an already digitized banking system without any substantial improvement. The end result could be that we neither gain improvements nor avoid creating numerous potential problems—it's like trying to steal a chicken and ending up losing rice. I personally prefer to proceed cautiously and not blindly promote CBDCs on a large scale, or to adopt a "sandbox" approach like Hong Kong.
Q4: Will this lead to regulatory references in regions like the EU and Asia? How will the U.S. actions affect the global Web3 regulatory landscape?
Luke:
The Genius Act, Clarity Act, and Anti-CBDC Act passed in the U.S. in 2025 may inspire the EU and Asian countries to reference its cryptocurrency regulatory model. The EU's MiCA regulations may be refined to align with U.S. standards, while Japan and Singapore may follow suit in stablecoin regulation. India might balance innovation with compliance, and China could leverage the opportunity presented by the Anti-CBDC Act to expand the influence of the digital yuan, potentially developing the use of renminbi stablecoins vigorously, similar to the U.S.
The global Web3 regulatory landscape will trend towards standardization, encouraging private stablecoins and DeFi. However, the U.S. stance against CBDCs may cause it to "fall behind" in CBDC payment systems while simultaneously elevating the status of other private cryptocurrency platforms. This could trigger global regulatory competition, directing capital towards regulatory-friendly regions, and may also exacerbate geopolitical friction, testing the U.S.'s leadership in the digital economy.
Sam:
The EU may not necessarily follow suit, but some Asian countries have a demand for regulatory references because the EU has been regulating cryptocurrencies for a long time. In 2014, Germany became the first country to accept Bitcoin as currency, followed by the Netherlands, France, and others. Last year's statistics showed that there were over 2,700 cryptocurrency licenses across Europe, and Canada has had more licenses and regulations than North America for a while. However, Asia does need to reference these regulations, as it currently has the least, with Poland being the only exception. From this data, it is evident that in terms of cryptocurrency regulation or crypto-friendliness, the U.S. can only be considered to be keeping pace with the established norms, given its large size and the difficulty of making swift changes.
However, regulations regarding stablecoins will reference North American legislation to align with compliance, as mainstream stablecoins are primarily pegged to the dollar, which is itself heavily regulated. This round of operations in North America will also accelerate the implementation of regulations in various regions, primarily concerning stablecoins, and there may soon be cryptocurrency taxation. The regulatory standards of major countries and regions will quickly align, leading to a more standardized and transparent industry. The days of hundredfold returns on investments will be hard to come by. Web3 will no longer be a path to quick wealth but will develop more sustainably.
Lawyer Li Zhongzhen:
In terms of stablecoin regulation, Hong Kong is ahead, but regarding cryptocurrency regulation beyond stablecoins, the U.S. is the fastest country to establish a detailed regulatory framework globally. Other countries can improve their regulatory frameworks by referencing the U.S. model based on their national conditions, such as implementing tiered and categorized regulation of crypto assets and clarifying regulatory agencies and systems.
The U.S. has fired the first shot, and I believe other countries will soon follow suit. I expect that in no time, the global Web3 regulatory landscape will continue to improve, potentially even forming mutual recognition of regulatory compliance.
Pang Meimei:
The Genius Act establishes a solid regulatory framework for stablecoins, while the Clarity Act clearly defines categories of digital assets, corresponding regulatory agencies, and the regulatory responsibilities of different institutions. The Anti-CBDC Act explicitly prohibits the Federal Reserve from issuing central bank digital currency to individuals, preventing excessive financial surveillance and maintaining the role of commercial banks in the financial system.
Previously, U.S. regulation was marked by uncertainty; on one hand, different states had varying regulatory approaches, and on the other, there was ongoing debate over whether cryptocurrencies were securities or commodities. This uncertainty led many entrepreneurial entities to migrate to other regulatory-friendly regions. The implementation of these three acts may help the U.S. regain leadership in digital asset innovation, and the regulatory framework could become a global reference template, prompting other countries to accelerate the improvement of laws related to crypto assets. The digital asset ecosystem in the U.S. and globally may undergo significant transformation.
Q5: The three acts are seen as a turning point for the U.S. and even the entire cryptocurrency industry, shifting from "barbaric growth" to "rule-driven." How will they affect the compliance costs and operational models of Web3 startup projects?
Luke:
Clearly, the three acts will push the U.S. cryptocurrency industry from "barbaric growth" towards rule-driven governance, significantly impacting the compliance costs and operational models of Web3 startup projects. In the short term, compliance costs will increase due to stablecoin disclosures, audits, and KYC/AML requirements, leading to higher initial expenditures for startups (legal costs can account for 40% of financing). Smaller projects may face outflows due to heavy burdens. However, in the long term, clearer regulations will reduce litigation risks and attract VC investments. The operational model will shift from ambiguous to compliant. There will be a focus on decentralized governance and RWA tokenization to gain exemptions (e.g., ICO caps at $75 million), transitioning from rapid iteration to innovation within legal frameworks.
This may squeeze smaller projects in the short term, but in the long run, it will enhance industry maturity, attract global resources, and establish an internationally recognized regulatory framework, which may influence other regions' legal compliance regarding the cryptocurrency market (e.g., EU MiCA, Singapore DTSP, etc.).
Sam:
To some extent, this marks the transition of Web3 entrepreneurship from "disorderly innovation" to a "compliance-first" era.
Several aspects can be anticipated, such as the entrepreneurial threshold will be significantly higher; issuing tokens will not be as easy, and obtaining licenses will become standard; compliance costs will also rise sharply, with budgets for lawyers, audits, KYC/AML becoming essential; the industry will accelerate the elimination of non-innovative, unprofitable small projects or gray projects; however, POW miners should be among the biggest beneficiaries, especially Bitcoin. Only compliant businesses can scale up and sustain themselves in the long run, while avoiding the situation where bad money drives out good.
However, for the "Crypto Native" community, Web3 is Web3, it is business; cryptocurrency is cryptocurrency, it is technology. Native cryptocurrency will find its place to thrive.
Lawyer Li Zhongzhen:
With the implementation of the Genius Act, Clarity Act, and Anti-CBDC Act, project teams need to determine their compliance paths based on their project types:
Projects issuing stablecoins must invest significant funds to obtain the necessary licenses and establish independent auditing systems and bankruptcy isolation mechanisms. Particularly regarding the requirement for reserve assets, a 1:1 reserve ratio imposes high demands on the project's financial strength.
For non-stablecoin projects, project teams need to clearly understand whether they are dealing with securities or commodities. In the absence of regulation, project teams might have only needed to assemble a technical development team, a security protection team, and a marketing team to narrate their story, raise funds, and go on-chain, but that is no longer sufficient. Therefore, at the project's initial stage, teams must establish professional compliance teams to respond to SEC or CFTC regulations, with compliance costs potentially exceeding R&D costs, making it difficult for under-resourced small projects to incubate.
Pang Meimei:
Yes, these three acts collectively establish clear "rules of the game" for the cryptocurrency industry. The lack of clear rules in the past few years has led legitimate entrepreneurs to face unpredictable regulations, while speculators have profited from legal ambiguities. These three acts will reverse this situation.
The acts detail requirements for stablecoin issuers, trading platforms, and DeFi projects, and outline many prohibited behaviors. Asset reserve requirements and fund segregation systems increase capital and management costs, while financial information disclosure and audits raise operational costs. For those digital assets that were previously in a gray area, determining their regulatory attributes will require more resources, thus increasing compliance costs. Additionally, countries or institutions planning to issue central bank digital currencies may need to readjust their strategies and plans, further increasing compliance costs and uncertainties. The rise in compliance costs may lead some small projects to exit the market, but it also provides a clear path for quality projects to establish long-term operational models based on legal regulations, ensuring their stable and sustainable operation.
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